As we pick up our story of swindler
Oscar Hartzell, by 1915 Oscar and his compatriots
were telling suckers that $50 invested in the Drake
Estate would bring $100,000 plus the entire city of
Plymouth, England as part of the settlement, just
as soon as the issue was finally adjudicated.

In
the early 1920s Hartzell then moved to London, to
do further research, ahem, and help the process along,
while his agents in the Midwest collected the funds.
Hartzell would send wires back to America proclaiming
things such as King George and the House of Lords
had stated they were going to pay him billions.

Oscar
became a fixture in London, taking up an apartment
in one of the better neighborhoods, buying suits on
Savile Row, and dining nightly at the Savoy Hotel,
table number 101. But on August 9, 1922, the British
Home Office wrote the American embassy in London confirming
there was "no unclaimed Sir Francis Drake Estate."

Hartzell
seized on this, wiring his donors cheerfully, yes
there was no such item as "an unclaimed Sir Francis
Drake Estate." As Richard Rayner writes in "Drake's
Fortune," Hartzell's point was quite different, "namely
that the estate was legally in the hands of the wrong
people and should be handed over to Colonel Drexel
Drake and thus himself." Of course there never was
a Drexel Drake. But since Hartzell hadn't committed
any offense in England, there was nothing Scotland
Yard could do, no matter how much the U.S. State Department
complained as the years went on.

By
the late 1920s, stock swindles of all sorts were common
in America so the Drake Estate, by comparison, didn't
seem so outlandish. Then in 1928 Iowa's secretary
of state, Ed Smith, tried to stop Hartzell, but when
the state legislature tried to act, the public bombarded
the representatives with letters protesting what Smith
was doing. Americans can "donate" to whomever they
please, was the attitude of Iowa's farmers, so the
legislation was defeated, another vindication for
Hartzell.

Then
on October 11, 1930, Oscar Hartzell struck gold, only
this time it was in the form of an essay by none other
than economist John Maynard Keynes in The Saturday
Evening Post titled "Economic Possibilities for Our
Grandchildren." Keynes argued that even in difficult
times like the nation was now going through the virtues
of capital investment were all too clear. In the piece
he made reference to Sir Francis Drake and the treasure
he stole from Spain.

Keynes
linked the emergence of England as a world power directly
to Queen Elizabeth and her use of the money. Rayner
writes, "She invested it and arranged for England
to take half the interest each year while the rest
compounded at an annual rate." Noted Keynes, "The
power of compound interest over 300 years is such
as to stagger the imagination. Every pound which Queen
Elizabeth invested in foreign trade has now become
100,000 pounds."

Keynes
was arguing for deficit spending as a way of dealing
with the Depression, but it was far more than that
for Oscar Hartzell. From Rayner, "Here was John Maynard
Keynes, the world's top money man, echoing what he'd
been saying all along: Sir Francis Drake! Compound
interest! Staggering returns!"

Well,
it should be no surprise that Hartzell mimeographed
thousands of copies of the article and distributed
them at Drake Estate meetings and throughout the Midwest.
Farmers began spouting Keynes and it was as if Keynes
himself had endorsed the scheme.

Hartzell
wired from London, "You can see that the matter is
so far reaching that the rambling minds of great financiers
of the past have been made to tow my mark regardless
of consequence."

Farmers
in South Dakota and Iowa, for example, would write
Hartzell asking whether the abandonment of the gold
standard affected the estate at all? Hartzell would
reply in his normal, cryptic way. Send money.matter
moving fast. And so they did, $millions of it.

Hartzell
was still living in London, though, managing to elude
the law and the best efforts of the State Department,
the FBI, Scotland Yard and the U.S. Post Office. Each
agency had files inches thick on Oscar and the Drake
Estate. But he wasn't committing any crimes as all
of the "donations" were being collected in America,
after which his agents would wire vast sums of it
to him overseas.

Finally,
a U.S. Postal Service inspector, John Sparks, along
with help from Scotland Yard was able to nail Hartzell
on mail fraud charges after getting some of the agents
in America, as well as Oscar's friends in London to
talk. Enough of them admitted the Drake Estate was
a swindle to press charges and Hartzell was extradited
to face trial in Sioux City, Iowa in 1933. He was
convicted and sent to prison for ten years, though
his attorneys did attempt one appeal, which failed.
But even after his arrest the swindle continued, with
one new agent collecting $500,000 over 1934-35. These
were desperate times and those Midwesterners who were
being solicited wanted to believe in some miracle
to get them out of their misery.

Alas,
Hartzell was diagnosed as being mentally ill and he
died in an institution, alone and crazy. But with
a simple scheme he had placed himself in the Wall
Street Hall of Shame.

[Source:
"Drake's Fortune" Richard Rayner]

Wall
Street History will return on February 21.

Brian
Trumbore

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